Going Once…Going Twice…The 700 Mhz Spectrum is Sold

It ended in a $19 billion whimper. The Federal Communication Commission posted this to its Web site Tuesday afternoon:

3/18/2008 05:14:26 PM Auction 73 Closed

There were no bids, withdrawals, or proactive activity rule waivers placed in Round 261. Therefore, Auction 73 has closed under the simultaneous stopping rule.

After 260 rounds of bidding over more than seven weeks the government auction has ended for the 700 Mhz wireless spectrum.

The winning bids totaled $19,592,420,000. That’s nearly double the amount the commission had hoped to raise from the spectrum being abandoned next year as television stations switch to new frequencies. On the scale of billions, the total has hardly changed in a month. But bidding continued on little blocks of frequencies around the country that cellphone companies are using to fill in gaps in their service. The last bid in the auction was $91,000 for frequencies around Vieques, P.R.

The government has yet to release the names of the winning bidders, but it may do so in the next few weeks. Analysts still guess that Verizon and AT&T most likely have bought the biggest chunks of spectrum to fill in their existing networks.

First, the commission needs to decide what to do with what it called the D block — a block of spectrum designated to be used both for commercial wireless service and for communication between public safety agencies. The single $472 million bid for that block is far below the $1.3 billion minimum price set by the commission. Analysts suggest that the government will likely proceed with the sale of the rest of the spectrum and go back to the drawing board for the D block.

Once the names are released, the auction rules give bidders a very short amount of time to deal among themselves, possibly trying to shore up financing. Then they will have to make a payment in full for their winnings. And of course they will need to spend many more billions of dollars between them to actually build out the networks that they signed up for.